In 1995, X fully funded the acquisition of a property by C, a Hong Kong company. C did not have any other asset. In the same year, the shares in C (the Subject Shares) were transferred to two BVI companies, and each company executed a declaration of trust with respect to the Subject Shares in favour of X. X recently discovered that the two BVI companies had already been dissolved in 2013 and 2015 respectively. X applied for a vesting order on an ex parte basis pursuant to s.52(1)(b)(iii) of the Trustee Ordinance (Cap.29) (the TO) in respect of the Subject Shares.
Held, granting a vesting order in favour of X on an ex parte basis, that:
- Whilst the Court was satisfied that X had locus standi to apply for a vesting order, being the sole beneficiary of the Subject Shares; and that the Court had jurisdiction to exercise the discretion under s.52 of the TO, the concern was whether it was correct that the application was made ex parte (Orwin v Attorney General  2 BCLC 693, Wismettac Asian Foods Inc v United Top Properties Ltd  3 HKLRD 732 applied).
- As far as Hong Kong companies were concerned, although s.752(5) of the Companies Ordinance (Cap.622) excludes property or right held by the company on trust for any other person from the general provision under s.752(1) that “every property and right vested in or held on trust for the company immediately before the dissolution is vested in the Government as bona vacantia”, it remained necessary to join the Secretary for Justice as the respondent in an application for a vesting order in respect of certain property formerly owned by a dissolved company. The rationale was that the Secretary for Justice was joined as the respondent to represent the Government (Wong Shuk Ying v AG  HKLR 985, Orwin v Attorney General  2 BCLC 693, Chan Ping Sang Johnny v Secretary for Justice  2 HKLRD 1082 applied).
- As for foreign companies, the question of who should be joined as a respondent would depend on who had become the holder of the legal title to the property under the applicable law, which ought to be the law of the place where that company was incorporated. In the present case, it would appear that, in principle, the Attorney General of BVI should be joined as the respondent under the BVI Business Companies Act 2004. And it would have been necessary to seek leave to serve the originating summons out of the jurisdiction pursuant to O.11 r.9 of the Rules of the High Court (Cap.4A, Sub.Leg.) (the RHC).
- X’s failure to join the Attorney General of BVI as the respondent, and commencement of these proceedings by an ex parte originating summons, were procedural irregularities which had not nullified the proceedings under O.2 r.1(1) of the RHC. The Court had a very wide discretion to decide how to deal with such procedural irregularities, including waiving any such irregularities.
- Whilst it was always a serious matter to deprive a proper party of the chance to be heard, in the present case, there was indisputable and overwhelming evidence that X was the beneficiary of the Subject Shares; and it was most probable, had the Attorney General of BVI been joined as the respondent, that he would have no objection to the application, and elected not to take part in the Hong Kong proceedings. Having regard to all relevant circumstances, the the procedural irregularities were waived and a vesting order was granted in favour of X on an ex parte basis. However, this decision was not intended to relax the requirement of following the proper procedure.
This was an ex parte application for a vesting order in respect of the shares in a company previously held by two BVI companies which had been dissolved on trust for the applicant.
Editorial Note: Practitioners may find assistance in the practical ways to minimise the time and cost to be incurred in similar applications set out by the Judge in para.25 of the full judgment.